The Declining Market

Over 500,000 Jobs Lost in November 2008 - Highest Unemployment Rate in 15 Years

MarketSpecialist — Tue, 09 Dec 2008 05:07:15 +0000

Jobs are one of the major indicators of declining market. In November 2008, payrolls took a deep dive as 533,000 jobs were cut. Now that our unemployment is at 6.7% we are at all 15 year high. According to Market Watch,

“It was only the fourth time in the past 58 years that payrolls had fallen by more than 500,000 in a month. Since the recession began 11 months ago, a total of 1.9 million jobs have been lost. Job losses in September and October were revised much lower.

In addition to the 533,000 lost jobs, an additional 621,000 workers were pushed into part-time work and 422,000 simply dropped out of the labor force.

“This is almost indescribably terrible,” wrote Ian Shepherdson, chief U.S. economist for High Frequency Economics. “The pace of job losses is accelerating alarmingly.”

Over the past three months, 1.26 million jobs have been lost, a pace of job destruction exceeded only once since 1945.

“The threat of a widespread depression is now real and present,” said Peter Morici, a business professor at the University of Maryland.

The recession “is going to be long and drawn out,” wrote Jennifer Lee, an economist for BMO Capital Markets.

The unemployment rate rose from 6.5% in October to 6.7% in November, the highest jobless rate since October 1993.

Job losses were widespread across industries in November. Fewer than a third of industries were hiring in November.

In services-producing industries, 370,000 jobs were lost, a record excluding one month in 1983 when nearly three-quarters of a million workers at AT&T went on strike.

The grim report could set the stage for further responses from Washington to address the recession. The Bush administration promised “aggressive” action, and pressure increased on the incoming Obama administration to craft a sizable fiscal stimulus plan. The large loss of jobs could also boost the chances for the automakers to get a loan from the federal government.

The Federal Reserve is likely to lower its interest rate target at the Dec. 16 meeting, economists said.

The employment report was much worse than expected. Economists expected job losses of around 350,000 in November. They expected the unemployment rate to rise to 6.8%. See Economic Calendar.

“We expect labor market conditions to be dreadful for many months to come and consequently for consumer spending to continue to decline,” wrote Josh Shapiro, chief economist for MFR Inc.

Job losses in September and October were revised sharply lower by a total of 199,000. Over the past three months, payrolls have fallen by an average of 419,000 per month, compared with average monthly losses of 82,000 earlier in the year.

An alternative gauge of unemployment — which includes discouraged workers and those whose hours have been cut back to part-time — rose to 12.5% from 11.8%. The number of workers forced to work part-time rose by 621,000 to 7.3 million.

Total hours worked in the economy fell 0.9% in November and are down 2.8% in the past year. The average workweek fell to a record-low 33.5 hours in November. The decline in working hours is consistent with a 5% annualized drop in gross domestic product, wrote John Silvia, chief economist for Wachovia.

Average hourly earnings rose by 7 cents, or 0.4%, to $18.30. Average hourly wages are up 3.7% in the past year, close to the 3.8% rise in the consumer price index.

In goods-producing industries, 163,000 jobs were lost, according to a survey of work places. Manufacturing lost 85,000 workers, while construction lost 82,000.

In the services, 136,000 jobs were lost in business services, including 101,000 in employment services, such as temporary jobs. Financial services cut 34,000 jobs. Retail shed 91,000 jobs, including 24,000 at auto dealers.

Leisure and hospitality industries cut 76,000 jobs

Health and education services industries added 52,000 jobs. Government added 7,000.

In a separate survey of households, the government found that employment fell by 673,000, the largest lost since August 2001. Unemployment rose by 251,000 to 10.3 million. Unemployment has increased 2.7 million during the recession and 2.7 million more have been forced into part-time work.

In November, the labor force fell by 422,000.

The employment-population ratio fell to 61.4% in November from 61.8%. The labor force participation rate fell to 65.8% from 66.1%.

Rex Nutting is Washington bureau chief of MarketWatch.”

Click here to link to the story.

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Zell Sees Housing Rebound Next Year

admin — Sun, 24 Aug 2008 05:16:04 +0000

Today’s guest post by Living Off Dividends & Passive Income who shares our views on the US economy and real estate markets.

According to Bloomberg.com;

Billionaire Sam Zell said the housing market could start recovering as early as next year and he’s focusing on investing in debt rather than equity.

“We believe that the opportunities, particularly in difficult situations, are in the debt,” said Zell, who made his fortune building the largest publicly traded office and apartment companies in the U.S. “We have been focused on, not only in real estate but in corporate, identifying debt situations where it is trading at a discount.”

Early next year the U.S. may see the bottom of the single- family housing market, Zell, 66, said in an interview today with Bloomberg Television. “I think it will be relatively fragile as confidence builds and it will take probably another year for confidence to be completely returned.”

Zell is focusing on debt as the real estate recession deepens. Existing U.S. home sales fell to a 10-year low in the second quarter and the median price for a single-family house dropped 7.6 percent. Record foreclosures have brought on more than $505 billion in capital losses and asset writedowns worldwide and companies that lent money to homeowners and repackaged the debt into securities saw those businesses falter.

Zell says he’s not buying property at the moment.

“I think the real estate market as a whole is fairly priced,” Zell said. “I think from a yield point of view, it might be attractive. But I am a capital investor and an entrepreneur, and I need to be able to invest in situations that by virtue of changing them, I can dramatically change value.”

Zell also said the U.S. government must be willing to step in to protect the debt of Fannie Mae and Freddie Mac’s, the two biggest suppliers of cash to the U.S. housing market.

“I think there is no question that the government’s responsibility must include protecting Fannie and Freddie debt,” Zell said. “It is extraordinarily important. They today represent 70 percent of the mortgage market in this country, and I think that percentage is growing as other lenders are moving away.”

If he really thought that real estate was on the upturn, don’t you think he would be buying property or at least getting ready to buy? The fact that he said he’s buying debt and in the same breadth mentions that the government should protect Fannie Mae & Freddie Mac’s debt indicates that he’s actually buying their bonds. Bonds issued by Fannie and Freddie should be just about as secure as U.S. Treasuries, which have the “full faith and credit” of the U.S. government behind them. But their yields remain far higher than Treasuries bonds, with the highest spread in two decades.

A 30-year Fannie Mae mortgage-backed security now yields around 6.5% which is 44% higher than a comparable 30-year Treasury at 4.5%. Incidentally, Standard & Poor’s recently cut the rating of Fannie and Freddie’s subordinated debt and preferred stock three notches to “A-” from “AA-.” However, the rating agency also confirmed they are maintaining the “AAA” rating of their bonds.

So I’m reasonably convinced that Zell, one of the smartest real estate investors ever, is buying Fannie Mae bonds as an alternative to Treasuries. For Bloomberg to claim that he thinks housing will turn a corner next year seems disingenuous.

If you’d like to invest like Zell, you can buy the First Trust/FIDAC Mortgage Income Fund (NYSE: FMY). Its entire portfolio is invested in “AAA” rated Freddie Mac debt and it currently yields around 7.6%. Note that this isn’t a recommendation to buy this Fund and I do not have a position in it.

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I.O.U.S.A - The Movie that Speaks to our Declining Market

MarketSpecialist — Wed, 06 Aug 2008 09:26:37 +0000

There is no denying that our country has always faced financial problems based on our mentatility of borrowing versus saving…of consuming versus producing…of “printing money” when needed! This issue has been compounded with the downturn of our real estate market and depreciating home values. Our homes are the single largest asset (or should I say liability now) of many Americans. With a decrease in this asset, spending is minimized and families cannot rely on their homes as an ATM machine anymore. This issue is hitting home, not only as a country but individually. A movie called I.O.U.S.A is being released this month that outlines not only our current financial conditions but the history that has led to where we are today from a debt perspective. Below is the trailer:

As it can be seen in the trailer, there is no question that we are truly facing a major crisis not only for ourselves but for future generations. We may honestly be at jeopardy of loosing our place as the one of the worlds pillars and super powers.

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Home Builder WCI Communities Files for Chapter 11

MarketSpecialist — Tue, 05 Aug 2008 06:01:39 +0000

WCI Home Builders could not obtain the necessary funding to maitain a healthy cash flow. With $2.18 billion in assets and $1.92 billion in debts WCI had to file for Chapter 11. WCI Home builders focus on the luxary real estate market where most of its business is centered out of Florida (one the top states for declining real estate prices). A week ago its stock went from 99c to 2c. This is a far cry from the ~$20 it was trading for about a year ago. This is yet another plea for help in our declining real estate market.

Read the full story from NY Times.

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Government Support for Homes Pending Foreclosure

MarketSpecialist — Mon, 04 Aug 2008 06:45:18 +0000

Bush recently passed a housing law to try and “help” homes that are pending foreclosure. $300 billion is being given to the FHA to help refinance homes at a more affordable rate. This is expected to be dispersed to over 400,000 households. There are many other perks to this housing bill such as grants to fix up foreclosed homes and tax credits for first time home buyers. Read the full article from the News & Observer.

One point that the article does not mention is the fact that the banks still have to WANT to refinance the loan with a FHA loan. According to lenders, the new loan amount would be 90% of the new appraised value and the difference from the previous balance on the home would be a write off. For instance, if the home was worth 500,000 in 2005 and is currently appraised for 350,000 today, the new loan would be $315,000 and the bank would write off $185,000.

My question is, why would a bank want to do that when they can put the home into foreclosure and get 100% of the current value in a shorter amount of time? The new interest rate is not going to be the 3 or 4% that many home owners had in 2002 and 2003 (not to mention those homes that had negative amortization loans). My suspicion is that this might buy time for homeowners but several of them will end up defaulting again. However, this housing bill does do a good job of giving the perception that the government is “there to help”!

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Could 500 Billion turn into a Trillion Dollars in Write Downs?

MarketSpecialist — Mon, 28 Jul 2008 17:04:27 +0000

With all the financial turmoil our economy is facing right now it is no surprise that there has already been 500 billion dollars in losses and asset write downs by our financial institutions. According to Money Morning, this is forecasted to continue with an expected total of 1 TRILLION dollars in write downs! With so many people waiting on the sidelines to buy, it is not a far stretched theory. Some feel that there is hope with the new bill that the US House of Representatives just passed:

Allowing the government to insure up to $300 billion in refinanced mortgages.

Establishing a tax break of as much as $7,500 for first-time homebuyers

And creating a new regulator to oversee government-sponsored enterprises Fannie and Freddie.

Though this may help, with 25 million homes in risk of entering into negative equity, there is no denying that there will be more write downs and losses to come resulting in tighter lending and downward pressure on market conditions.

Read the full article on Morning Money.

TheDecliningMarket.com / support@thedecliningmarket.com / 1-800-881-1479

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66 Places to buy a Home in this Declining Market

MarketSpecialist — Mon, 28 Jul 2008 05:49:43 +0000

According to MSN there are still areas that hold a potential profit if you decide to buy a house and hold it for some time in this market. Below is a table that forecasts out expected equity for homes in different cities (with the assumption that you hold on to it until 2012). Texas, New York and South Carolina seem to be the top winners with the most cities on the list. This is atlease a 4 year investment so don’t expect to flip and run…

How much equity you’d have by 2012 if you bought a low-priced home today…

Metro area	6% loan	7% loan	8% loan
McAllen-Edinburg-Mission, Texas	$90,437	$89,871	$89,381
San Antonio	$90,017	$89,064	$88,239
New Orleans-Metairie-Kenner, La.	$88,907	$87,473	$86,232
Houston-Sugar Land-Baytown, Texas	$87,837	$86,703	$85,721
Dallas-Fort Worth-Arlington, Texas	$83,880	$82,669	$81,620
Rochester, N.Y.	$82,898	$81,898	$81,032
Syracuse, N.Y.	$80,231	$79,341	$78,571
Buffalo-Niagara Falls, N.Y.	$77,934	$77,045	$76,275
Jackson, Miss.	$77,648	$76,659	$75,804
Austin-Round Rock, Texas	$70,007	$68,530	$67,251
Memphis, Tenn.-Mississippi-Arkansas *	$68,348	$67,286	$66,367
Baton Rouge, La.	$61,802	$60,648	$59,651
Pittsburgh	$61,174	$60,221	$59,397
Tulsa, Okla.	$58,599	$57,624	$56,780
Little Rock-North Little Rock-Conway, Ark.	$58,420	$57,416	$56,548
Augusta, Ga.-Richmond County, S.C.	$57,424	$ 56,465	$55,636
Lakeland, Fla.	$56,960	$55,793	$54,784
Columbia, S.C	$55,993	$54,936	$54,022
El Paso, Texas	$55,100	$54,316	$53,637
Akron, Ohio	$54,594	$53,410	$52,387
Greensboro-High Point, N.C.	$54,592	$53,463	$52,485
Oklahoma City	$54,431	$53,475	$52,648
Youngstown-Warren, Ohio-Boardman, Pa.	$54,014	$53,176	$52,450
Wichita, Kan.	$53,684	$52,764	$51,968
Dayton, Ohio	$51,393	$50,327	$49,405
Detroit-Warren-Livonia, Mich.	$50,599	$49,241	$48,067
Indianapolis-Carmel, Ind.	$49,520	$48,330	$47,300
Albany-Schenectady-Troy, N.Y.	$49,104	$47,630	$46,355
Omaha, Neb.-Council Bluffs, Iowa	$47,823	$46,654	$45,643
Birmingham-Hoover, Ala.	$47,404	$46,276	$45,300
Atlanta-Sandy Springs-Marietta, Ga.	$46,314	$44,730	$43,360
Scranton-Wilkes-Barre, Pa.	$46,251	$45,254	$44,391
Des Moines-West Des Moines, Iowa	$46,078	$44,844	$43,776
Kansas City, Mo.-Kansas City, Kan.	$45,699	$44,413	$43,300
Cleveland-Elyria-Mentor, Ohio	$45,251	$44,025	$42,964
Grand Rapids-Wyoming, Mich.	$44,484	$43,304	$42,282
Toledo, Ohio	$44,009	$42,928	$41,992
Tampa-St. Petersburg-Clearwater, Fla.	$41,847	$40,237	$38,843
Chattanooga, Tenn.-Georgia *	$41,025	$39,955	$39,029
Cincinnati-Middletown, Ind.-Kentucky *	$40,454	$39,184	$38,086
Greenville-Mauldin-Easley, S.C.	$40,268	$39,169	$38,218
Harrisburg-Carlisle, Pa.	$37,456	$36,168	$35,054
Portland-South Portland-Biddeford, Maine	$37,197	$35,204	$33,479
New Haven-Milford, Conn.	$36,521	$34,284	$32,348
Deltona-Daytona Beach-Ormond Beach, Fla.	$36,217	$34,643	$33,281
Charleston-North Charleston, S.C.	$35,592	$34,062	$32,738
Louisville-Jefferson County, Ky.-Indiana *	$33,003	$31,809	$30,775
St. Louis -Illinois *	$32,933	$31,630	$30,503
Sarasota-Bradenton-Venice, Fla.	$31,544	$29,577	$27,875
Charlotte-Gastonia, N.C.-Concord, S.C.	$29,919	$28,524	$27,318
Columbus, Ohio	$28,982	$27,628	$26,457
Albuquerque, N.M.	$28,805	$27,356	$26,102
Jacksonville, Fla.	$26,832	$25,241	$23,863
Nashville-Davidson-Murfreesboro-Franklin, Tenn.	$26,567	$25,181	$23,982
Knoxville, Tenn.	$24,862	$23,663	$22,625
Palm Bay-Melbourne-Titusville, Fla.	$23,090	$21,467	$20,063
Richmond, Va.	$21,500	$19,740	$18,217
Raleigh-Cary, N.C.	$19,004	$17,386	$15,985
Springfield, Mass.	$16,338	$14,591	$13,079
Philadelphia-Camden, N.J.-Wilmington, Del. -Maryland *	$14,492	$12,532	$10,836
Hartford-West Hartford-East Hartford, Conn.	$13,494	$11,405	$9,598
Allentown-Bethlehem, Pa.-Easton, N.J.	$12,779	$11,063	$9,578
Milwaukee-Waukesha-West Allis, Wis.	$12,745	$11,076	$9,632
Virginia Beach-Norfolk-Newport News, Va.-North Carolina *	$10,449	$8,515	$6,842
Orlando-Kissimmee, Fla.	$9,400	$7,433	$5,730
Colorado Springs, Colo.	$4,482	$2,736	$1,224

Source: Center for Economic and Policy Research and the National Low Income Housing Coalition
* Metropolitan area extends across state borders

Read the whole article from MSN Money. You can also email our Customer Support or call at 1-800-881-1479 if you are interested in finding an top ranked Realtor in any of these areas.

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Home prices fall in 100 major metro areas in first half

Home prices fall in 100 major metro areas in first half

admin — Sat, 05 Jul 2008 17:45:48 +0000

Home prices fall in 100 major metro areas in the first half of 2008.

Median national home prices down 7.7% in Q1 to $196,300.

Biggest Losers:

Sacramento, CA down 29.2%
Riverside, CA down 27.7%
Lansing,MI down 26.9%

Biggest Gainers:

Binghamton, NY up 11.8%
Peoria, IL up 10.4%
Spartanburg, SC up 10.1%

See the full video from CNBC.

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66 Places to buy a Home in this Declining Market

Could it be the Bottom Based on Past Statistics?

admin — Fri, 09 May 2008 05:37:40 +0000

The Wall Street Jornal posted an article stating that we have hit a point where according to history it is time for the cycle to reverse. The graph shows housing starts (per thousand) versus time (in years) in correlation to a recession. Read the full story from the Wall Street Journal.

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A Graphical Depiction…

admin — Sun, 04 May 2008 22:49:07 +0000

Some interesting graphs from various sources (referenced on graph).

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The Declining Market

Over 500,000 Jobs Lost in November 2008 - Highest Unemployment Rate in 15 Years

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Zell Sees Housing Rebound Next Year

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I.O.U.S.A - The Movie that Speaks to our Declining Market

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Home Builder WCI Communities Files for Chapter 11

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Government Support for Homes Pending Foreclosure

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Could 500 Billion turn into a Trillion Dollars in Write Downs?

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66 Places to buy a Home in this Declining Market

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Home prices fall in 100 major metro areas in first half

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Could it be the Bottom Based on Past Statistics?

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A Graphical Depiction…

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